We can judge whether BHP Billiton Limited (ADR) (NYSE:BHP) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, research shows that these picks historically outperformed the market when we factor in known risk factors.
BHP Billiton Limited (ADR) (NYSE:BHP) investors should be aware of an increase in hedge fund interest lately. At the end of this article we will also compare BHP to other stocks, including Time Warner Cable Inc (NYSE:TWC), Occidental Petroleum Corporation (NYSE:OXY), and Enterprise Products Partners L.P. (NYSE:EPD) to get a better sense of its popularity.
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If you’d ask most shareholders, hedge funds are assumed to be unimportant, old financial vehicles of the past. While there are greater than 8000 funds trading at the moment, We hone in on the crème de la crème of this club, around 700 funds. These hedge fund managers handle the majority of the smart money’s total asset base, and by keeping track of their first-class equity investments, Insider Monkey has deciphered a number of investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per year for a decade in their back tests.
With all of this in mind, let’s take a gander at the fresh action regarding BHP Billiton Limited (ADR) (NYSE:BHP).
What does the smart money think about BHP Billiton Limited (ADR) (NYSE:BHP)?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the number one position in BHP Billiton Limited (ADR) (NYSE:BHP). Arrowstreet Capital has a $18.8 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Segantii Capital, managed by Simon Sadler, which holds a $12.5 million position; the fund has 2.9% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish contain D. E. Shaw’s D E Shaw, Michael Hintze’s CQS Cayman LP and Israel Englander’s Millennium Management.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Manikay Partners, managed by Shane Finemore, initiated the most valuable position in BHP Billiton Limited (ADR) (NYSE:BHP). Manikay Partners had $10.9 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $9 million investment in the stock during the quarter. The other funds with brand new BHP positions are Michael Platt and William Reeves’s BlueCrest Capital Mgmt., Larry Foley and Paul Farrell’s Bronson Point Partners, and Bart Baum’s Ionic Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as BHP Billiton Limited (ADR) (NYSE:BHP) but similarly valued. We will take a look at Time Warner Cable Inc (NYSE:TWC), Occidental Petroleum Corporation (NYSE:OXY), Enterprise Products Partners L.P. (NYSE:EPD), and Duke Energy Corp (NYSE:DUK). This group of stocks’ market caps are closest to BHP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TWC | 107 | 16157890 | 2 |
| OXY | 44 | 1371938 | -2 |
| EPD | 21 | 210066 | 1 |
| DUK | 22 | 646270 | 1 |
As you can see these stocks had an average of 49 hedge funds with bullish positions and the average amount invested in these stocks was $4.60 billion, compared to just $132 million in BHP’s case. Time Warner Cable Inc (NYSE:TWC) is the most popular stock in this table, while Enterprise Products Partners L.P. (NYSE:EPD) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks BHP Billiton Limited (ADR) (NYSE:BHP) is even less popular than EPD. Considering that hedge funds aren’t fond of this stock in relation to other companies mentioned in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
